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What is Lighting Network? What is it used for?

Updated on Thu, 7 Sep, 2023 at 5:48 PM

The Lightning Network is designed to make bitcoin transactions as fast and cheap as possible. It’s part of a newer class of crypto technologies known as “layer 2” blockchains. By offloading some transaction “traffic” to the Lightning Network’s “layer 2” blockchain, the core Bitcoin blockchain (“layer 1”) can move faster.

Lightning Network. Advantages.

  1. Instant Payments: Bitcoin aggregates transactions into blocks spaced ten minutes apart. Payments are widely regarded as secure on Bitcoin after confirmation of six blocks, or about one hour. On the Lightning Network, payments don't need block confirmations, and are instant and automatic. Lightning can be used at retail point-of-sale terminals, for device-to-device transactions, or anywhere instant payments are required.

  2. Micropayments: New markets can be opened with the possibility of micropayments. Lightning enables one to send funds down to 0.00000001 bitcoin (< 0.01 cents) without custodial risk. The Bitcoin blockchain currently enforces a minimum output size many hundreds of times higher, and a fixed per-transaction fee that makes micropayments impractical. Lightning allows minimal payments denominated in bitcoin, using actual bitcoin transactions.

  3. Privacy: The Lightning Network offers users a high degree of confidentiality. Users do not need to make their channels known to the broader network. End users can open private channels to a Forging Block Lightning Node, which provides deep liquidity, and no need to connect a single channel to the rest of the network.

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